The Minnetonka-based insurer said it trimmed the percentage of premium revenue it spent on medical bills for its commercial insurance to 79 percent, down from 81 percent in last year’s first quarter.

Normally, that’s good news on Wall Street. It shows costs are falling and the insurance is priced correctly.

But next year, the reform law that aims to cover millions of uninsured people will require insurers to spend at least 85 percent of their premium dollars on medical costs for commercial insurance.

Overall, UnitedHealth said its first-quarter profit rose 21 percent to $1.19 billion, or $1.03 per share. That’s better than the $984 million, or 81 cents per share, reported a year ago. Revenue climbed 5 percent to $23.19 billion from $22 billion.

Analysts surveyed by Thomson Reuters expected a much smaller profit of 69 cents per share on revenue of $22.76 billion.

UnitedHealth also said it now anticipates a 2010 profit of $3.15 to $3.35 per share, up from the $2.90 to $3.10 per share it projected earlier this year. Analysts expect earnings of $3.08 per share.

CEO Stephen Hemsley said the new guidance offered “a pretty fair representation” of where the company stands, considering it still faces high unemployment, challenging Medicare reimbursement and budget pressures on state Medicaid programs.

The insurer’s shares fell 25 cents to $30.98 Tuesday.

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